Gains, however, faded as the dollar index hit two-month highs, making oil, copper and a host other commodities , less affordable for holders of other currencies.

"It's terrible price action considering China's rate cut," said Scott Shelton, energy broker and commodities specialist for ICAP in Durham, North Carolina. "It shows this is not the solution the market is seeking for crude demand."

A stubborn global oil glut, partly due to record pumping by the biggest producers in OPEC, has prevented crude prices from staging a meaningful rebound despite a few sharp intermittent rallies since early September.

Growing US crude stockpiles have also added more pressure on WTI than on Brent, with the transatlantic spread < settling at its widest in two weeks at $3.33 a barrel.

The front month U.S crude contract also hit its deepest discount in five months to the nearby contract as weak spot prices pushed traders to store more crude for later delivery.

The discount, known as contango, has been widening since Wednesday and hit 91 cents, its deepest since May 15.

"We've had massive builds. The whole spread curve in WTI is getting weaker, encouraging people to put oil into storage," said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in Laurel Hollow, New York.

US oil drillers also slowed the pace of rig cuts this week, idling just one rig, the smallest cut in eight weeks suggesting they may soon return to the well pad with hopes of rising crude prices in the future.